Dive Brief:

• On-time delivery of gifts is a concern for 91% of consumers this year, up 6% from 2017, according to delivery service Dropoff's annual holiday survey. However, 77% said they plan to shop at the last minute in 2018, a 15% rise over last year.
• That is likely to make same-day delivery a draw this holiday season. Dropoff found that 51% of shoppers are more likely to purchase from retailers who offer that service, while 42% said same-day delivery is especially valued in the purchase of holiday gifts. Because of the surge in expected last-minute shopping this year, 78% report that they are more likely to buy gifts from merchants offering same-day delivery. 
• Millennials are 118% more likely to pay extra for the service and 48% more likely than non-millennials to buy a gift during the holidays from a retailer offering same-day delivery, Dropoff found. Additionally, luxury shoppers — defined as those who shop at Neiman Marcus or Nordstrom — are 105% more likely to have bought gifts in the last year with same-day delivery, and are 23% more likely than non-luxury shoppers to buy gifts during the holidays from merchants offering same-day delivery.

Dive Insight:

The holiday shopping season is approaching, and as e-commerce grows so do the demands for delivery services that get the order right, and get it where it is going right now. This fourth quarter "right now" may well be defined as a shorter time window than in the past. In many cases, it will mean same-day delivery.

Big retailers are getting ready for this trend. For example, Target, via recently acquired Shipt, plans to expand same-day delivery across the Midwest. This includes groceries, essentials, home goods, electronics and toys. Meanwhile, Walmart has acquired Parcel, a same-day and last-mile delivery company, and plans to use it in New York City. And Home Depot is investing $1.2 billion to improve its outbound delivery system so as to become the "best delivery agent in home improvement."

A study by Zebra Technologies found that 40% of logistics companies will offer two-hour delivery by 2028. Same-day delivery is costly, Dropoff acknowledged in an e-book, but 87% of shoppers who purchase a gift and 74% who buy for themselves with same-day service are likely to return to that retailer again. 

On the other hand, if something goes wrong — a damaged package, a wrong item delivered, a late-arriving gift — those customers are likely to be lost. According to the Dropoff survey, only 20% of shoppers will return to buy again after a bad delivery experience, and the consumer will blame the retailer for that bad experience regardless of who actually delivers it. When a gift arrives late, 80% of holiday shoppers said it reflects poorly on the retailer, and 74% blame the merchant if the gift arrives damaged.

The Dropoff survey also reported that retailer investment in omnichannel will remain essential because 54% of U.S. consumers prefer to shop for gifts online compared to 6% in-store only, and 40% prefer to use both channels.